Combining ESI Funds and EFSI Implications for the Alpine region Strategy Andrea Mairate CE DG REGIO 3rdc Friends of Eusalp meeting Brussels, 21 June 2016
The 315bn investment plan has the potential to bring investments back in line with historical norms Real gross fixed capital formation Baseline trend vs. historical norm vs. investment plan EU-28, in 2013 prices, bn 3,039 3,021 Historical trend / Baseline forecasts 2,940 Investment plan 2,869 GFCF historical norm, assuming an investment/gdp ratio of 21-22% 2,527 2,543 2,640 2,528 2,567 2,717 2,657 2,714 2,659 2,647 2,864 2,748 2,678 2,606 2,416 forecasts 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EU INVESTMENT PLAN: RATIONALE EU INVESTMENT & COMPETITIVENESS GAP HIGH LIQUIDITY IN THE MARKET PUBLIC BUDGET CONSTRAINTS EU Investment Plan EU/MS policy action + EU budget + EIB capacity to mobilise private sector funds towards strategic investments. FINANCIAL AND NON-FINANCIAL BARRIERS TO INVESTMENT
Investment Plan for Europe: 3 pillars 1. MOBILISING FINANCE FOR INVESTMENT 2. MAKING FINANCE REACH THE REAL ECONOMY Mobilise at least 315bn over 3 years for investment in strategic projects and access to finance via the European Fund for Strategic Investments (EFSI) within EIB/EIF Cooperation with National Promotional Banks European Investment Project Portal European Investment Advisory Hub: technical assistance 3. IMPROVED INVESTMENT ENVIRONMENT Predictability and quality of regulation Removing non-financial, regulatory barriers in key sectors within EU Single Market Structural reforms at national level 4
ESI Funds contribution to the Investment Plan for Europe 1. Mobilising finance for investment Better use of ESI Funds COMPLEMENTARITY: ESIF / EFSI EUR 20 bn additional investment through FI for 2015-2017 SMEs Transport Research Environment JASPERS 2. Making finance reach the real economy Technical Assistance FI-Compass Programme funding for project preparation 3. Improved investment environment Ex-ante Conditionalities
ESI Funds Financial Instruments doubling the use Resource-efficient way of using EU budget funds to enable investment in the economy - through loans, guarantees, equity, venture capital, etc. 2014-2020 What's New? Regulation: FI extended to ALL thematic objectives and all ESIF funds I N D I C A T I V E T A R G E T S At least an overall doubling of the use of FI (EUR 12bn to ± 30bn) Additional support: FI Compass - advisory service "Off-the Shelf" Instruments Increased leverage effect
European Fund for Strategic Investments (EFSI) EFSI shall mobilise EUR 315 bn in 3 years (15x leverage), under an EU guarantee of EUR 21 bn, implemented via two components: an Infrastructure and Innovation Window (IIW) through EIB to support investments of EUR 240 bn an SME window (SMEW) through EIF to support investments of EUR 75 bn 7
EFSI - structure and investment target Total EIB/EIF financing Total investment mobilised 49bn 240bn 12bn 75bn
Project cycle for an EFSI Project STEP 1 Proposal Project Promoters present proposal to EIB Group directly STEP 8 repayment STEP 2 Appraisal - financial - economic - environmental - social - and technical assessment STEP 7 Monitoring and reporting EFSI PROJECT CYCLE STEP 3 EIB Management Committee EIB Management Committee approval STEP 6 Disbursement STEP 4 Investment Committee Approval - Investment Committee assessment and approval - Final approval by EIB / EIF Board of Directors STEP 5 Signature Financing contract is agreed
ESIF-EFSI complementarities Legal bases of both ESIF and EFSI allow for contributions to support each other's objectives (complementarity element) Their combination is also possible: at project level, financial instrument level and through investment platforms Implementation process has to respect applicable rules (CPR v EFSI Regulation) State aid rules apply on a case-by-case basis 10
Comparison ESIF - EFSI ESI Funds EFSI ca 90 % grants national / regional allocations and allocations to OPs concentration on 4 thematic objectives project selection by Managing Authority in MS project has to fit into one of 275 OPs minimum for national co-financing guarantees for loans no national quota no concentration project selection by EIB/EIF project has to fit in one of 7 investment fields mobilizing private co-financing always requested, but no strict minimum rules
Comparison ESIF - EFSI ESI Funds EFSI No minimum project size state aid compatibility check case by case all project (revenue generating or not) ESIF (grant) component fills the market gap or reduces the risk for investors 25 Mio minimum size (or contribution to investment platform) compatible with EU State aid rules economically viable project higher risk than EIB standard lending
National Promotional Banks (NPBs) NPBs are entities mandated by Member States to carry out development or promotional activities NPBs hold a significant financing and advisory role in their constituencies they "know" the local projects Member State participation under EFSI can be done through NPBs (8 MS already committed) NPBs may also receive EIB or other support NPBs' participation mode to be defined by EIB 13
Investment Platforms (IPs) A tool for pooling investment projects with sectoral or geographic focus More efficient risk allocation between investors (lower transaction and information costs) Flexible geographic scope- possibility to finance projects in a region, country, a group of countries incl. macro-region (multi-region platform) IPs may also receive EIB or other support (Member State, private investors) 14
ESIF and EFSI combination Financial instrument/investment platform level
ESIF and EFSI combination Financial instrument/investment platform level OR
ESIF and EFSI combination SME products
Implications for the Alpine region Strategy ESI funds and other funds are set to support the strategy s objectives in relation to SME development in the Alpine Region 3. Investment Platforms can attract and combine resources from different parties and catalyze investments by bringing together relevant actors and stakeholders